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TMI Blog2016 (8) TMI 956X X X X Extracts X X X X X X X X Extracts X X X X ..... ive Bank Ltd.? (ii) Whether the Tribunal was correct in holding that Co-operative Bank are not liable to deduct tax on the interest paid to its members on the ground that they are exempt u/s 194A(3)(v) of the IT Act, 1961? (iii) Whether the Tribunal is right in law in overlooking the established principle of generalia specialibus non derogant vis- - vis the specific provisions of Sec.194A(3)(viia)(b) and general provisions of Sec.194A(3)(v) of the Act? (iv) Whether the tribunal was correct in not appreciating the fact that the provision of Section 194A(3)(v) is a general provision granting benefit to all co-operative societies, whereas, the provisions of Section 194A(3)(i)(b) deals with co- operative society carrying on the business of banking, hence specific provisions in any case overrides the general provisions? 2. We have heard Mr. Dilip for Sri K.V. Aravind, learned counsel appearing for the appellant-Revenue. 3. After hearing the learned counsel appearing for the appellant-Revenue, we find that, the issues which arise for consideration in the present appeal are already covered by the decision of this Court dated 21.6.2016 in ITA No.604/2015 and ot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee in the case of co-operative society engaged in banking business and have upheld identical order of CIT(A). The relevant observations of the Tribunal in this regard were as follows: 15. We have given a very careful consideration to the rival submissions. We are of the view that the submissions made by the learned counsel for the Assessee deserves to be accepted. As rightly contended by him Sec.194A(3)(i)(b) of the Act is a provision which mandates deduction of tax at source by a co-operative Society carrying on the business of banking, where the income in the form of interest which is paid by such society is in excess of ten thousand rupees. Sec.194A(3)(v) of the Act provides that tax need not be deducted at source where the income in the form of interest is credited or paid by a co-operative society to a member thereof or to any other co-operative society. This provision therefore applies to all co-operative societies including co-operative society engaged in the business of banking. It is not possible to exclude co- operative society engaged in the business of banking from the provisions of sec. 194A(3)(v) of the Act on the ground that the same is covered by the provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccepted there plea and in their judgment have observed that Sec.194A(3)(i) exemption limit of ₹ 10,000/- to interest paid on time deposits with co-operative societies engaged in carrying on in business of banking is allowed but that does not mean that all co-operative societies who have credited or paid exceeding ₹ 10,000/- are liable to deduct tax at source. The Court held that co-operative society engaged in carrying on business of banking and primary credit societies stand on different footing and belong to different class. That does not mean that Sec.194A(3)(v) of the Act is applicable only to co-operative societies other than co-operative societies carrying on the business of banking as observed in para 37 of its judgment the Pune ITAT in the case of Bhagani Nivedita Sah Bank Ltd(supra). In fact in para 2 of Circular No.9 dated: 11.09.2002, the CBDT has very clearly laid down that co-operative societies carrying on banking business when it pays interest on deposits by its members need not deduct tax at source in view of the provisions of Sec.194A(3)(v) of the Act. 17. We also find that the CBDT in Circular No.9 dated 11.09.2002 clarified certain aspects whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and/or Special General Body Meetings of the co-operative bank and must be entitled to receive share from the profits of the co-operative bank. [F.No.275/106/2000-IT(B)] (2002) 177 CTR (St) 1 18. It can be seen from para 2 of the Circular refered to above that the CBDT has very clearly laid down that co-operative societies carrying on banking business when it pays interest on deposits by its members need not deduct tax at source. The above interpretation of the provision by the CBDT which is in favour of the Assessee, in our view is binding on the tax authorities. 19. In the case decided by ITAT Panaji Bench in ITA No.85/PN/2013 for AY.09-10 in the case of the Bailhongal Uraban Co-op Bank Ltd Vs. JCIT order dated 28.08.2013, the Tribunal proceeded on the footing that the aforesaid Circular has been quashed by the Hon ble Bombay High Court in the case of The Jalgaon District Central Co-Operative Bank Ltd. Vs. Union of India 265 ITR 423(Bom) and therefore choose to follow the decision rendered by Pune ITAT SMC in the case of Bhagani Nivedita Sahakari Bank Ltd(supra). In our view the Hon ble Bombay High Court in the case of Jalgaon District Central Co-Operative B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esaid decision. Respectfully following the decision of the co-ordinate bench referred to above, we uphold the order of the CIT (A). 3. The aforesaid shows that the Tribunal was bound by its earlier decision in case of Bagalkot District Central Co-operative vs. JCIT (2014) 48 TAxmann.com 117. When we further enquired from the learned counsel for the Revenue as to whether the decision of the Tribunal was carried by the Department before this Court or not and in response thereto, the learned counsel for the appellant has brought to our notice the decision of this Court dated 16.12.2015 in ITA 100116/2014 whereby, the view taken by the Tribunal has not been interfered with. We may record that this Court in the above referred decision observed thus: In this appeal by the Revenue, the issue involved is for consideration whether the Co- operative Bank was required to deduct tax while paying interest to its members on time deposits under Section 194-A of the Income Tax Act. 2. The Ministry of Finance, Government of India vide Circular No.19/2015 in F.No.142/14/2015- TPL, has held that the Co-operative Banks are not required to deduct tax at source on time deposits of i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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